Saturday, April 17, 2010

It's money with the wrong dna. (originally posted May 25,2009)

Funny money thinks it has all the answers. It forgets that its replication is based on a rising market and its arrogance on a short memory. If something crashes it's usually because "the economy is blablabla." If money gets burned in the Print space, it's because "the internet balabala and the End of Print." That's why Cenveo closed Anderson, that's why Boundary Capital is closing outlets all over the UK and why Zell took the Tribune into bankruptcy.

Meanwhile David Black is doing very nicely with newspapers in Southwest Canada/Northwest USA and The Color Company just replaced Fedex Kinko's in London and is also growing nicely.

In the States we have this thing about "Go West! Young Man." Maybe the Color Company should "Go North!" They could pick through the debris and find those smart, ever resilient, persistent Printers and click them on to their printernet. Then they could move to Australasia and do the same. Then maybe they could give AlphaGraphics a real run for their money in the States.

Then they could both fight it out with our homegrown good guys to see who will be the Starbucks of the Printernet.

"Earning" money by getting transaction fees from your VARs may work in finance. It's not sustainable in the real economy. Earning money from your VARs through value given, value received transactions is a different business model.

The End of Print? Hah! More likely it's the end of Funny Money poking it's nose into places it doesn't belong.
Prontaprint accused of supplier 'kickbacks'
@ comment posted at printweek.com

"Firms that want to supply Prontaprint had better be careful.

If anybody from Boundary Capital or ODC rings you up and says 'you can supply our franchisees but you'll have to grease our palms first, by the way your not allowed to speak to anyone about it' just remember that the guys that pay the bills namely the franchisees won't touch you with a bargepole if they find out about it. If we find out your doing it already we'll tell each other. Kickbacks mean WE HAVE TO PAY MORE. Be careful what you get yourselves into.

We want to deal with firms that don't give kickbacks.

36 comments:

  1. You've got it right.

    Investment/venture/"funny£ money is the mark of death for the likes of Prontaprint, Kall Kwik and ODC. Companies like Boundary Capital plc that think they can take a stake using borrowed money then sit back and enjoy the earnings, like some kind of landlord taking an easy rental, completely miss the point. Print AND franchising needs ongoing investment and ongoing re-invention.

    The result? Boundary Capital are rapidly going bust. And they deserve to. They thought they could come in with their big bucks and that would be enough. All they have done is complete the ruination of two once-great franchise chains. These were failing, due to neglect, well before they ever took over 4 years ago, but their blind, greedy arrogance has just about finished the job.

    They paid around 40 million pounds for the takeover - now it's worth a mere fraction of that with around a 30% rate of store closures since they took over and a lot more to go.

    Leave the running of these businesses to the true entrepenueurs, innovators and committed business people. The guys who play with money deserve their burnt fingers.

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  2. Dear Anon,
    Amen.

    As it is in printing, so it is in newspapers (Zell and the Chicagoe Tribune) and autos (Chrysler)

    It's such a relief to get through the most recent episode of too much leverage and too little smart.

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  3. Boundary plc are set to sell off all franchised stores after Christmas. They have 'let go' all non-essential support staff (including, bizarrely, the MD's of both Prontoprint and Kallkwik). All franchises are now being allowed to leave the franchise group without any financial penalties. In 12 months this once great chain will be finished. Boundary have a lot to answer for...

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  4. Ah the clean fresh air once the bullshit clears. Given that the first post in this thread was back in May, it's clear that "no one could see this coming..." Bad organizational dna always has a way of emerging.

    I wonder if you noticed that Cenveo profits(sic) were done 90% in the last quarter.

    What goes round, comes round.

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  5. More mismanagement by Boundary, owners of Prontaprint and Kallwick franchises:

    http://www.printweek.com/business/news/969599/ODC-recruits-management-team-drive-owned-centre-sales

    The comments by franchisees and other print bods are pure gold!

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  6. Dear Anonymous,

    Thank you for the link. You're right. The comment thread is a unique window on the worlds of stupid finance the franchise business and the realities on the ground. I was also taken by all the references to printing.com. They got on my radar a while ago, and the more I see the more I think they could be a real threat to Alpha and some of the other chains when they get to the states.

    Expect some tweets about this list today...

    Thank you again.

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  7. Here's what it looks like in 140 chrs.

    ToughLoveforX
    Anon at my blog: story re: Boundary Capital ( Prontaprint & Kallwick ) comments by franchisees are pure gold! http://ilnk.me/c64 < yep.>

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  8. Prontaprint and Kall Kwik centres are closing regularly now. It can't be long before Boundary Capital and Panther (that's Kealan Lennon) can't afford the bank repayments and the whole thing implodes.

    Niall McFadden the ex-CEO of Boundary has had to resign as he may be made personally bankrupt.

    How are the mighty fallen!

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  9. Thanks for the data point.

    If GM,Lehman, Chrsyler have all gotten reality sandwiches, why not Boundary Capital.

    I luv that the this comment thread started in May. "Nobody could have predicted. " Please. Turns out it's pretty obvious if you just pay attention.

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  10. As I am about to leave the company I can only say Good Luck to the remaining franchisees (you'll need it). Boundary are finished as the banks are calling time at the end of this year's first quarter. See this thread:

    http://www.iii.co.uk/investment/detail%3Fcode%3Dcotn:BCP.L&it%3Dle

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  11. The comment above is typical of the staff at ODC and Prontaprint (and no doubt Kallkwik): like rats jumping from a sinking ship. Poor advice, weak management, expoitative staff, greedy owners.
    Tell me James: which company have you conned to take you on board this time? Let me know so I can avoid them like the plague?
    Good luck: you'll need it!!

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  12. I am reliably informed James Needham did not post the comment on the 20th Jan, they are not his comments and he remains totally committed to Prontaprint and it's franchisees as I am sure all people at ODC do.The link attached to the comment gives away the culprit and the link attached to the comment has also been used by this person before. It has in fact been attached to malicious emails(suject of a police investigation) and referred to conversations by this person, so the impersonation is obvious. Please note the similarity to other postings, including the subsequent posting on the 29th, postings on Printweek and of course the Forum.
    Please also note the use of the metaphor, this is a common theme."rats leaving a sinking ship" and "holed below the water line" being the most common.So to the person with too much time on his hands, please leave James Needham alone, come out of the closet you impotent fool, and if perhaps,you are bored go after all that potential business you are sitting on!

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  13. Yeah, I agree with the comment above, I recognise that guy on the forum.He should stop dancing, put his fiddling fiddle down and make some money, pay his bills and like the rest of us,get on with his life, what a nasty piece of work, there is no need to make business personal. I heard those emails were racist and even talked about his kids, that was mean

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  14. Reading all the above comments has certainly put me off any franchising for life! I was tempted by printing.com but it seems that the franchise owners (Boundary that is) don't really know anything about the business.

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  15. Dear anon,
    My $.02 based only one what I glean from watching the biz. I think printing.com has a very different business model and seem to have very good dna.

    Also take a look at AlphaGraphics. Different biz model but very good dna it seems to me.

    My personal opinion is that hooking up with a good franchise is a good way to go. Getting involved with a bad one can be a real time and money sink.

    I haven't seen much about any of the others, so please don't take my leaving them out as having any implication.

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  16. Kall Kwik and Prontaprint franchisees are due to meet up with a major London law firm who are international specialists in franchising. The firm, Field Fisher Waterhouse, believe they have identified material breaches of the franchisor's legal responsibilities to their franchisees. At worst (i.e. worst for ODC/Boundary) this could result in a total devaluation of Boundary Capital PLC's (and Kealan Lennon's Panther's) investment in KK and PP. Boundary have declared the Arnotts investment to be worthless - the shares fell on the news - and if the same happens with ODC/KK/PP there will be virtually nothing left in their portfolio.

    Private equity rushes in where angels fear to tread!

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  17. Sometimes you win, sometimes you lose. It's only a pity there was so much collateral damage.

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  18. Its a cliche but the 'end is nigh' for Prontaprint and Kallkwik. Blame the company, blame the staff, blame the franchisees themselves but let's leave Jesus out of it...

    http://www.printweek.com/news/990488/ODC-accused-lack-support/

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  19. "And nobody could have seen it coming..." Thanks for the link

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  20. The best of luck to Kall Kwik and Prontaprint franchisees planning legal action against ODC. This bunch of chancers have by their greed and stupidity brought two fine brands to their knees. They thought they had bought a "cash cow" but they forgot that even cash cows require a business vision and good management, both of which clearly don't exist with the current owners. The commercial director of ODC is a Mr F Nagle who was for two years CEO of the O'Briens Sandwich Bar francise and they failed under his stewardship. With the number of franchised centres for both brands having been around 500 at their peak they are now down to around 200 and falling each month. It is clearly a business to get out of and not into. The writing is on the wall!

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  21. The trouble is what do all the existing franchisees do with their businesses? They will find it extremely difficult to find prospective new franchisees to take over and its highly unlikely ODC (Boundary) have the cash to 'buy them out'? I know of one PP franchisee whose business has been on the market for 5 years with zero buyers interest!
    A lawsuit won't do either side any good however: the only winners are the law firm!

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  22. As soon as ODC is put out of business - which, mark my words, it soon will be - the franchisees' profits will approximately double. So please don't anybody lose sleep over what might happen if they are suddenly without a franchisor.

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  23. In relation to the two previous comments - franchisees need to be aware of the possible outcomes if their franchisor files for bankruptcy. Unfortunately its not a case of 'I'm my own boss now'. The bankrupt franchisor will undoubtedly have creditors who will want as much compensation as possible and that may include the intellectual property of the brand. I don't know anything about this particular case but if the franchisor (ODC?) goes into administration then rest assured that the admintrators will be looking very closely at the current franchise agreements. Profits may indeed double but which coffers they fill may be up for negotiation.

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  24. Dear Anon,
    Just a thank you. Your observations for weeks has been so useful to give a picture of how this plays out on the ground. If you ever do a post or a whitepaper or a presentation on the risks and benefits of buying a franchise, I bet many people would find it of value.

    These days, twitter has become my social media of choice. I just want you to know that if ever I get an @ me or a DM, you know I will spread your story to be the best of my limited ability.

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  25. Re. the comment two spaces above:
    When ODC fails (either by the current legal action, decay of the network or both) even if the franchise agreements fall into the hands of their creditors or a buyer, there will be no practical means of enforcing payments from franchisees. By that time franchisee "obedience" will have completely vanished. A franchisor relies on co-operation in the last resort.
    The Prontaprint and Kall Kwik franchises are effectively finished, along with Boundary Capital, Panther and Mr Kealan Lennon's arrogant posturings.
    Long live the franchisees' businesses!

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  26. I understand that ODC are in court today to determine costs payable to a franchisee for failing to meet their obligations.

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  27. Can anyone advise on what a franchisee not involved in the lawsuit can expect?

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  28. I actually think that if the franchise group wins ODC will go into administration anyway, even if they don't whatever they agree with say half the franchise group will have to be applied across the whole to make it workable!

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  29. Rumour has it that ODC have appointed administrators today...

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  30. any further word on the truth of the rumour?

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  31. whats going on? heard owners are no longer paying their dues? how long can odc last if thats the case

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  32. Apparently the old MD has left and a new one been appointed. Just when he had delivered his vision for the development of the franchise he is no longer around to implement it.

    So business as normal then.

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  33. The firm, Field Fisher Waterhouse, believe they have identified material breaches of the franchisor's legal responsibilities to their franchisees. Thanks for all

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  34. Over the next 6 months ODC will lose 50% of their income as their most profitable centres go independent. With only a single new centre being opened this year, how long can they survive?

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  35. KK and PP: DEAD...

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  36. It couldn't have happened to a better bunch of people. Goodbye ODC...

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